EU Carbon Border Adjustment Mechanism explainer

Earlier this year, the EC adopted a package of proposals under the EU Green Deal, which included a Carbon Border Adjustment Mechanism (CBAM) for imported products. Fastmarkets outlines what this will mean for the iron, steel and aluminium sectors.

Adopted by the European Commission on July 14, 2021, CBAM will apply to imports into the EU of iron, steel and aluminium, along with cement, fertilizers and electricity.
Why is it needed?
In the European Green Deal, the Commission proposed a new EU target to reduce greenhouse gas emissions by at least 55% by 2030, compared with the levels emitted in 1990.
Because other countries and regions might not have similarly ambitious goals, the EU wanted to introduce a mechanism to prevent carbon leakage, and to ensure that import prices reflected their carbon content more accurately.
Carbon leakage was identifed as any process by which EU-based companies might relocate carbon-intensive production abroad to take advantage of lax standards elsewhere, or EU products which could be replaced by more carbon-intensive imports.

CBAM was designed as an addition to the measures that already addressed carbon leakage within the EU Emissions Trading System...

Published

Maria Tanatar

November 22, 2021

08:50 GMT

London